According to sources, if collections continue to be poor, the government may have to follow the existing orders of releasing only 80% of the outlay

The cash-strapped state government may face more challenges ahead of the current fiscal year as its revenue in first six months is significantly below the target it set. The total revenue collection has been recorded at 39.78%, while major sectors such has Stamp Duty-Registration and Excise are about 8 to 10% below target.

This is expected to lead to cuts in the outlay released for development works. Last year, the government could release only 90% of the outlay for this purpose. According to sources, if collections continue to be poor, the government may have to follow the existing orders of releasing only 80% of the outlay.

Against the estimated revenue collection of Rs2.20 lakh crore in the fiscal year, Rs87,860 crore has been collected in the first six months, according to the figures recently released by the accountant general of the state.

Stamp Duty-Registration has collected Rs9,952 crore as against its annual target of Rs23,547 crore. Excise has collected Rs5,456 against its annual target of Rs15,343 crore. Interestingly, these two sectors collected more in the same period last year, though their targets were 13-15% lower. Vehicle Tax has also been registered a below-average collection, with Rs3,095 crore or 45.85% of the annual target of Rs6,750 crore. This sector collected 47.32% of its target in the first six months last year.

The good news for the state government that the collection from one of its key sectors, Sales Tax, has improved since last year. It registered 48.5% against last year’s collection of about 46%. For the first time in recent years the sector did not achieve its target of Rs74,616 crore, falling short of more than Rs1,000 crore in 2015-16.

“Despite the satisfactory monsoon, the revenue collection has not improved in the second quarter (July-Sept) of the fiscal year. Sectors such as Stamp Duty-Registration are faring worse than last year. But this may not lead to a deficit as this year we do not have to spend on drought-mitigation measures. Last year, the expenditure on drought was huge,” said an official from the finance department.

The officer said the Housing target of Rs1,067 crore and the Urban Development target of Rs5,000 crore are not likely to be achieved for a second year in a row as the real estate sector is yet to recover from the slowdown. “The two departments could collect Rs44 crore and Rs298 crore in the first six months respectively. The government was betting on premiums from floor space index (FSI) and transfer of development right (TDR), as well as big-ticket projects such as the development of the Bandra government colony, BDD chawls and Dharavi slums. However, those are yet to begin. There is a slump in the real estate sector owing to the reforms government is yet to bring in,” he added.

“It is too early to say the collections are below average as this is only the half-year mark. The receipts always improve in the second half. We hope to achieve the targets by the end of the fiscal year,” said Meeta R Lochan, principal secretary, finance department (reforms).

Congress leader Sanjay Nirupam said last week that the revenue receipt percentage against the gross state domestic product has dropped to 7.9% from 8.2% during Congress-NCP regime.